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28 Jan 2009 : Column 103WH—continued
Mr. Mitchell:
That is absolutely correct. I shall deal primarily with the Humberside ports, which are of vital interest to me, but the case extends far wider. The effects are similar in smaller ports; actually, they are likely to be more devastating. The problem is what to do about it. As I understand it—perhaps the Minister will correct me—if the port businesses cannot pay their rate bills and go bust as a consequence of the retrospective rate demands, the business premises will pass to ABP, which will pay lower rates on them than those assessed for the
current operators. ABP will be in a powerful competitive situation if it carries on itself the business that used to be carried on in those premises by others.
What do we do about it? I want to make it clear that businesses are not saying that they do not want to pay rates. Ministers accuse them of that from time to time, but they are not saying it. They accept that they will be individually rated and that there will be some increase in rates as a result. They accept their liability to pay rates even though they already pay rates through the cumulo system via ABP. The grievously unfair thing is to be asked to pay retrospectively back to 2005. That is an impossible burden. It is unjust, unfair and unreasonable. I cannot see why the Government insist on it.
These rates are not like domestic rates, where a property can be rated and back rates have to be paid. Property does not move; it cannot get up and move on. Businesses cannot charge extra for services that they have delivered in the past, or increase their charges retrospectively, so they cannot pay retrospective rates that they were not billed for at the time.
The Government clearly feel guilty about this—I can see smiling admissions of guilt written on Ministers’ faces when they speak in debates. If they did not feel guilty, why would they be offering to allow the rates to be paid over eight years without interest? That is an admission of guilt. They will probably go further and will eventually allow businesses to pay in Zimbabwean dollars. They are clearly able to make amends.
Albert Owen (Ynys Môn) (Lab): My hon. Friend might know that the port of Holyhead, in my constituency, and other Welsh ports have had subsequent increases of some 220 per cent. in the rateable value that they will be paying. There is to be no transitional relief for them, so they will be expected to pay immediately. Does he agree that that will cause anxiety and make them less competitive compared with their European competitors? Moreover, at a time when energy prices have also gone up by 200 per cent., this adds to the burden on Welsh ports and British ports.
Mr. Mitchell: My hon. Friend is absolutely right, and I should have made that point myself about the effects that the measure will have.
The concession of paying over eight years is of little relevance if the debt has to be reported in the annual accounts, because if those accounts show that a company’s liabilities are greater than its resources, it will technically be insolvent and will not be able to carry on trading. The eight-year concession is therefore a bit of a failure.
Ministers have told us that the Government cannot scrap the measure, even now, but the Treasury Committee is recommending that they should scrap it. After looking into the matter, the Committee has recommended:
“Consideration should be given to the proposal to maintain the rateable values of premises in statutory docks and harbours at the levels published in the April 2005 rating lists until the new ratings list is published”.
Ministers say that they cannot do that, but why not? They say that writing off the retrospective debt would be unfair state aid, but that is one of the feeblest excuses that I have heard. To remedy an injustice is an unfair state aid—that is what they are telling us—but if that is the case, what is the writing off of the retrospective
payment between 2000 and 2005? Is that another form of state aid? That is the kind of chop logic being used to justify the measure.
Ministers also say that writing off that debt would be unfair to other ratepayers, but to whom? Who is competing with these dock businesses and is it fair to ask dock businesses to pay rates twice? They are already paying, through the cumulo system, and now they will have to pay retrospectively. Is that fair? Ministers’ arguments are so much gobbledygook. We are at the crunch point, because letters have gone out to all the Humberside ports, I think—certainly to those in north-east Lincolnshire—giving 2 February as the date by which the first instalment of these bills must be paid. If it is not paid by then, the whole sum is due, so the situation is now all or nothing.
Derek Wyatt (Sittingbourne and Sheppey) (Lab): Is my hon. Friend aware that in the Swale borough council area, where Sheerness port is, businesses have been issued with final payments? As a result, profitable small businesses face going under in this financial year.
Mr. Mitchell: That shows that in my hon. Friend’s constituency, as in mine and the constituencies of my hon. Friends, we are at crisis point. A decision has to be made, and that decision must be to write off the retrospective payments, which cannot be paid—I cannot emphasise that point enough. We cannot get blood from a stone. If we are to insist on these retrospective payments, we are going to bankrupt businesses on a large scale.
I pay tribute to my right hon. Friend the Minister, who is the nicest Minister I know. This is the unctuous bit before we come to the counter-punching. He has done an assiduous job in replying to the arguments and been meticulous in hearing constituents, listening to what the problem is and discussing it. I congratulate him on that, but the problem is that he is defending the indefensible. He is defending it very well, but this system is simply indefensible.
I accept that a decision to call the whole thing off is a political decision to take—perhaps one that is above the Minister’s pay grade—but that decision has to be taken, because this system is not going to work. I do not expect him to break down and confess at the end of the debate, however long my speech is, Mr. Atkinson, as that is not the nature of these Adjournment debates. However, I hope that he will go back to the Secretary of State and to the Treasury to say, “We cannot win this, and we are not going to. We cannot do this to these businesses. We cannot get blood from a stone.” It is not a matter of businesses saying that they will not pay; the point is that they cannot pay. This is about our businesses.
Gwyn Prosser (Dover) (Lab): Is it not the case that before those businesses go bust, the first casualties will be workers at the ports? In my port of Dover, one company is laying off 60 workers, one shipping company has gone bust and even the Dover harbour board is making people redundant. At a time when the whole industry is going through the squeeze of the credit crunch, here are our own Government, piling on the agony. Is not that wrong?
Mr. Mitchell: Absolutely. One hundred precautionary notices have been given by Cobelfret in Immingham, and I understand that three firms in Tilbury have already gone under—have become insolvent—because of this retrospective payment. That is the kind of damage, on an accelerating scale, that we are going to be causing.
The whole argument centres not on the rating assessment, whatever it is—I accept that it is going to be difficult to pay, but that is their due—but on the retrospective payments and the demand for payment of that increased non-domestic rate bill, back to 2005. That is the essence of the problem. I hope that the Minister will recognise that and report back that we are not going to be able to levy that retrospective payment.
I watched my right hon. Friend, who is a very capable Minister, on “Look North” on Monday, when I had the rare privilege of being in Grimsby. He said very eloquently that there was not much that the Government could do about redundancies, and that they were not the Government’s fault, but the redundancies that we are talking about will be caused by the Government. They are not like the redundancies at Corus; they will be caused directly by the Government if they go ahead with retrospective payments.
The consequences of going ahead will be disastrous for the ports, which are already in difficulties because of the recession and are already disadvantaged. I draw hon. Members’ attention to the Centre for Cities report, which tells us that the ports that are most threatened by the coming recession are Liverpool and Hull.
Mr. Frank Field: I am grateful to my hon. Friend for giving way, because in a moment I must leave for a meeting. Will he stress to the Government the fact that, appalling as it is to think about the number of people who will be made redundant, the ports are the arteries for our trade, which means that not only our port workers will be made redundant? Others will also be laid off because there will be no raw materials and no exports.
Mr. Mitchell: That is exactly right. We need to encourage exports at this time, with the pound at this low, competitive level, but we are destroying the structures in the ports. My port and the ports in the Humberside constituencies of my hon. Friends the Members for Brigg and Goole (Mr. Cawsey) and for Cleethorpes (Shona McIsaac) are the gateway to Europe and to the economic expansion and improvement of the area. They are going to be hit hard and directly by the measure, and they are already in difficulties. We are a disadvantaged area and, as the Centre for Cities report says, we are going to face real problems.
It is time for the Minister to go back to the Secretary of State and to the Treasury to say that there is another way. The Secretary of State has powers to prescribe ratings for the ports, which she retains, as they have never been repealed. She should therefore prescribe the assessment for 2005 as it was at that time—upgraded, of course, for inflation. There would be no loss of revenue to the Government because they are being paid through cumulo via ABP. They should forget the retrospective payments, which cannot be collected without ruinous damage being done to the ports and the companies concerned.
Why not then bring in the new assessments in 2010? That is an eminently sensible option that is open to the Minister. Put the blame where it belongs—on the valuation agency—and bring in the new assessments in 2010. My right hon. Friend said in an Adjournment debate last week that legislation would be needed to do that. Well, he needs legislation to do anything—levying the charges or wiping them.
I must point it out to my right hon. Friend that we are not exactly over-pressured by the legislative programme. We have the shortest Queen’s Speech I have ever known in my long career since Mr. Gladstone wrote the Queen’s Speech in 1893, when I first came into politics. There is not much business to get through; we are ticking over in this place. It is dead easy to pass legislation and we could do so to remove this damaging claim for retrospective payments that will be ruinous for our ports and the businesses in them.
Mr. Peter Atkinson (in the Chair): Before I call Mr. Stephen Crabb, may I have an indication of how many hon. Members want to speak? The winding-up speeches must start at about half-past 3, so it would be helpful if hon. Members bore in mind the fact that they should therefore speak for about five or six minutes.
2.51 pm
Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): I congratulate the hon. Member for Great Grimsby (Mr. Mitchell) on securing this important debate, which follows on from the 19 January debate on the Floor of the House. He started by talking about a monstrous injustice, and that is exactly what this is. That kind of language is certainly being used in relation to how some of the businesses I have recently been talking to in Milford Haven will be affected by the business rates revaluation.
I will not speak for long, but I would like to make a couple of points about the port of Milford Haven in my constituency. I reiterate the point made by my hon. Friend the Member for Boston and Skegness (Mark Simmonds) about the way in which this is impacting on small and large ports and on large firms and small businesses that are tenants of ports. In response to the hon. Member for Liverpool, Riverside (Mrs. Ellman) last week, the Minister said:
“The impact of the review... has not... caused universal problems”.—[Official Report, 19 January 2009; Vol. 486, c. 598.]
His response smacks of huge complacency. When we consider the range of ports and different parts of the country represented by Members here, I hope that the Minister will recognise the problems facing businesses that are tenants of ports.
The Minister for Local Government (John Healey): Is the hon. Gentleman aware that the number of ports that are part of the ports review is 55?
Mr. Crabb: I am aware of the number of ports and I have read the background material on this. I would have hoped that the Minister recognised that ports up and down the country and businesses small and large are affected. The impact on the viability of these firms and the jobs that these firms create and sustain is significant.
I should point out to hon. Members that I am a tenant of Milford Haven port authority because my constituency office is based on land owned by the port authority. I pay business rates directly, so the issue has not affected me directly—although a few weeks ago, I was interested to receive a form from the Valuation Office Agency asking me to fill out details of the activity that takes place at my premises. That smacks of the inefficiency of this whole process. Milford Haven is one of the last ports to receive the results of the revaluation, and a complaint that has come across loud and clear is the length of time it has taken.
I am a member of the Treasury Committee and we looked at this issue as part of our review of the work of the VOA. It will not surprise hon. Members to know that there were very strong feelings about this issue among members of the Committee. Those feelings were reflected in the recommendation that the Government should certainly consider maintaining the port ratings at the levels published in 2005 lists.
The size of the businesses in Milford Haven port means that some of the figures are not of the order of some of the sums mentioned by other hon. Members who have large firms that are tenants of their local ports. Nevertheless, the impact is real and significant. At Milford Haven docks, there are a range of micro and small businesses, some of which are very small—one or two person operations. In recent years, the port authorities have made huge efforts to diversify the kind of economic activity happening in and around the port. Alongside the traditional businesses associated with engineering and the remnants of the fishing industry, there are new media companies, bars, cafés, and an art gallery, which has just received a backdated bill for a liability of £19,000.
Albert Owen: Is the hon. Gentleman aware that Stena Line operates from Fishguard, and, as a port operator, it is passing this cost on to small businesses? In the port of Holyhead, some businesses that have been identified include engineers who do essential maintenance and leave their equipment in the dock in a small locker. They are being rated for the same time. Also, car hire firms are being charged rent for having a phone for emergency calls. Those are the types of small businesses caught up in this reassessment.
Mr. Crabb: The hon. Gentleman is exactly right. The impact is being felt far and wide among businesses that are close to ports.
As a commercial entity in its own right, Milford docks faces a 30 per cent. increase in business rates. That increase is coming from a separate assessment of four of its tenants who were not charged rates previously. The port authority paid the rates for the whole of the docks and the rental agreements with those four firms took account of that. The rent levels were therefore set accordingly. The new bill that the port authority has received is the same as it was previously, but it will not receive any rebate to offset the extra costs being levied by the new system. In addition, it is not in a position to reduce the rents to those tenants to help them meet the extra costs that they are facing. The burden of this problem affects both the port authority itself and its tenants.
The issue concerns many hon. Members up and down the country. It was not clear from the Minister’s response to the hon. Member for Liverpool, Riverside last week why he cannot take the action that many Members from all parties are calling for to bring a solution to this. At a time when one of his departments—Her Majesty’s Revenue and Customs—is writing off tax liabilities for profligate football clubs, why can he not focus on the action that is being called for and bring an urgent solution to the matter?
2.57 pm
Shona McIsaac (Cleethorpes) (Lab): I congratulate my neighbour and hon. Friend the Member for Great Grimsby (Mr. Mitchell) on securing the debate. I do not think that any of us here today can underestimate the devastating effect that this issue will have on the businesses operating out of our ports. We have had several meetings with Ministers about the matter—indeed, we have had a meeting with the Prime Minister too—and credit where credit is due, I appreciate the fact that changes have been made. The bills were not imposed immediately and, as has been said, firms will be given eight years in which to pay the backdated rates.
However, I am sorry to say that such changes have not gone far enough to stop the redundancies and prevent firms from closing down. In my part of the country, on the south bank of the Humber, we have seen some dreadful job losses in recent weeks. One of the most recent—at DFDS Tor Line—is directly because of port business rates. DFDS Tor Line is making about 10 per cent. of its work force redundant. It is one of the biggest employers in the port of Immingham in my constituency and employs about 700 workers.
I have received a letter from Jens Skibsted Nielsen, the managing director of DFDS Tor Line. I shall read out some of the things that he has said in that letter because it demonstrates excellently the real problem that companies are facing. He states in the letter that the company faces a £3 million business rate demand for 2009. Associated British Ports, the port owner, with which DFDS Tor Line has a commercial agreement, and through which it believed it had paid its contribution towards the business rate, refuses to discuss matters with DFDS. Indeed, it has in fact received a £5 million rebate from Hull city council—the port owner, that is, not the people who have had the rates imposed upon them. My hon. Friend the Member for Kingston upon Hull, North (Ms Johnson) is in the Chamber, but her position as Whip does not allow her to speak in the debate. However, she has attended all the meetings with Ministers, as have the other Hull MPs.
The letter from DFDS Tor Line goes on to state:
“The lack of consultation with port businesses added to the fact that no notice was given about the effects of the re-valuation post 2005 has left DFDS facing a backdated rates demand of £9.9m. Clearly we are not able to recover this cost from our customers so it becomes a liability going forward to a business that is already loss making.”
Recently, DFDS Tor Line received a letter from one of its customers, BMW, which stated:
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